11/12/2010 Market Recap: 77% chances the SPX 11/05 high will be revisited


Cobra's Market View Private Messaging System shows:


  TREND MOMENTUM COMMENT
Long-term 2 of 2 are BUY  
Intermediate 3 of 5 are BUY 4 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode.
Short-term Model is *SELL 6 of 6 are NEUTRAL The trend is down. I hold tiny short position over weekend.
GANN DAY MOON:SOLAR CYCLE CONCLUSION
11/14,11/26 11/21 : 11/22 Next pivot date: 11/24 – 11/26
BULLISH 0.1.1 SPX Intermediate-term Trading Signals: Head and Shoulders Bottom breakout, target 1242.
09/27 Market Recap: 9 POMO within 20 trading days means 14%+ up in 3 months.
10/01 Market Recap: Positive September plus mid-term election means 11%+ up to year end.
10/29 Market Recap: The last 2 months of year are bullish.
11/05 Market Recap: SPX daily bar completely out of BB may mean bulls are safe till the year end.
*11/12 Market Recap: 77% chances the 11/05 high will be revisited in 3 weeks.
BEARISH *1.0.6 SPY Unfilled Gaps: 20 unfilled gaps, the max was 21.
10/29 Market Recap: AAII bull ratio (4-week average) too bullish.
10/29 Market Recap: Commercial (smart money) short Nasdaq 100 heavily according to COT Report.
11/12 Market Recap: Too many Sentimentrader’s indicators are at bearish extremes.
11/05 Market Recap: 70%+ chances SPX will close below 1225 on weekly chart within 2 weeks.
6.4.0 SPX and NYMO Divergence Watch: SPX new high while NYMO is negative, topped?
6.4.3a SPY Bearish Reversal Day Watch: Bearish reversal day, so topped?
8.1.4 Normalized CPC: A little low.
0.0.2 Combined Intermediate-term Trading Signals: Trend line breakout, top to be confirmed.
0.2.4 Nasdaq Total Volume/NYSE Total Volume: Too high, so topped?
*
1.0.0 S&P 500 SPDRs (SPY 60 min): Descending Triangle, target $118.37.
*
11/12 Market Recap: Smart/Dump money confidence spread too high.
SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
TRADING PLATFORM:
SSO/SDS, UPRO/SPXU
Non-Stop 09/07 L N/A Partial profits on 09/24.
ST Model 09/24 L 11/08 Low Stopped out on 11/09 with profit.
NYMO Sell *11/12 S 2*ATR(10) Reference only, not meant to be followed.

SHORT-TERM: COULD SEE MORE PULLBACKS

We may see more pullbacks in the short-term, besides the arguments mentioned in the Friday’s After Bell Quick Summary, the Descending Triangle plus Bear Flag plus bearish Monday seasonality, the Sentimentrader still has too many indicators at bearish extremes. However, at the current stage, I’d consider the pullback is merely for the short-term which reason will be discussed in the intermediate-session below as chances are high that 11/05 high will be revisited at least.

IndicatorsAtExtremes 

0.0.2 Combined Intermediate-term Trading Signals, this is just a follow up. Trend line held for 2 days already so the top signal is confirmed. Of course, as mentioned above, this may just mean a short-term top.

CPCEWatch 

INTERMEDIATE-TERM: THE FIRST 2.5%+ PULLBACK AFTER A 40+ STRAIGHT UP TRADING DAYS WAS USUALLY A BUY

After 48 trading days without 2.5% pullbacks, SPX finally fulfill the forecast mentioned in 11/08 Market Recap: “2.5%+ pullbacks now or never”, now the question is what happened thereafter?

From the statistics below, 10 out of 13 cases (exclude 2 cases when SPX up 150 trading days without 2.5%+ pullbacks, both cases had just a very short-term pullback anyway) since 1991, the SPX would revisit the previous high in 3 weeks. In another word is that 11/05 high is unlikely the intermediate-term top, so at least bulls could wait until the revisit of the SPX 11/05 high before deciding what to do the next.

StraightUpMoreThan40TradingDays 

However, let me remind you that the sentiment now is very high which can be seen from the Smart/Dump Money Confidence chart below, so if indeed we see the revisit of the high in a very short time, the sentiment would very likely fly to the sky which for sure is not good for bulls.  I’ll keep eyes on this as well as the institutional buying and selling actions (courtesy of stocktiming) which now is lukewarm at best.

SmartDumbMoneyConfidencealgo

Listed below are all cases when SPX up 40 or more trading days without 2.5%+ pullbacks, for your references. Looks to me, the pullbacks were just short-term in most cases.

SPX1993
SPX1995
SPX1997
SPX2004
SPX2006
SPX2010 

SEASONALITY: BEARISH MONDAY, BULLISH FRIDAY, BULLISH THE WHOLE WEEK

According to Stock Trader’s Almanac:

  1. Monday before November Expiration, Dow down 7 of last 10.
  2. Week before Thanksgiving, Dow up 13 of last 16.
  3. November expiration day, Dow up 4 straight and 6 of last 7.

For November seasonality chart please refer to 11/11 Market Recap for more details.

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

SIGNAL COMMENT
QQQQ 10/15 L
NDX Weekly UP NASI STO(5,3,3) sell signal.
IWM
IWM Weekly UP
CHINA *Big red bar means more pullbacks ahead, so be careful.
CHINA Weekly UP
EEM
EEM Weekly UP
XIU.TO 08/31 L
XIU.TO Weekly UP
TLT ChiOsc is too low.
TLT Weekly DOWN *%B is a little too low.
FXE *Broadening Top? The breakout is bilateral, so wait.
FXE Weekly UP
GLD
GLD Weekly UP
GDX 10/29 L
GDX Weekly UP *BPGDM and GDX:SPX both are too high. Pullback?
USO
WTIC Weekly UP
XLE 06/15 L
XLE Weekly UP *%B is too high with negative divergence.
XLF 10/15 L Complex Head and Shoulders Bottom or Double Bottom breakout, target $16.74.
XLF Weekly UP
IYR
IYR Weekly UP Home builders are lagging.
XLB 11/02 L
XLB Weekly UP XLB:SPX a little too high.
  1. Please make sure you understand how to use the table above. The purpose of this report is to provide info so contradictory signals are always presented.
  2. Position reported in short-term session of the table above is for short-term model only, I may or may not hold other positions which will not be disclosed.
  3. Conclusions can be confirmed endlessly, but trading wise, you have to take actions at certain risk level as soon as you feel the confirmation is enough. There’s no way for me to adapt to different risk levels therefore no trading signals will be given in this report except the mechanical signals such as SPY ST Model.
  4. * = New update; Blue Text = Link to a chart in my public chart list.
  5. Trading signals in OTHER ETFs table are mechanical signals. See HERE for back test results. 08/31 L, for example, means Long on 08/31.
  6. UP = Intermediate-term uptrend. Set when I see at least one higher high and higher low on weekly chart.
  7. DOWN = Intermediate-term downtrend. Set when I see at least one lower high and lower low on weekly chart.
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